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Srbo Radisavljevic
Managing Principal/Investment Advisor

Edge Portfolio Management

City:Northbrook

State: IL



BIOGRAPHY:
At Edge, a low client to advisor ratio allows for personal and customized service for each individual.  Our goal is to work as a team for each client to provide not only portfolio management but wealth coordination and financial planning.  We make every effort to have frequent communication with our clients and to provide timely response to calls and emails.  I also enjoy spending time with my wife and three kids, following Chicago sports, enjoying ethnic cooking, and serving as a school board member for Norridge School District 80.

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Online Advisors Gaining in Popularity, Clients

Many online services offer financial advice for a two-digit fee.

| BY Kent McDill

Here is your task for today:

Try to find an actual human travel agent. Go ahead, we’ll wait.

With the creation of dozens of online services that provide travel information and makes reservations, and with dozens of websites that promise bargain airline fares and hotel rates, the occupation of “travel agent’’ has become almost solely a pursuit conducted on the Internet. Face-to-face meetings to discuss travel plans, or even voice-to-voice conversations, are rarely pursued and even more rarely accomplished.

Some worry the same fate will befall the financial advisor industry with the advent of numerous online advisor sites that can, for a small fee, provide much the same information a much more expensive actual living, breathing human financial advisor can provide.

There are services such as LearnVest, FutureAdvisor and Wealthfront which, for a relatively small fee, will provide online answers to questions investors have about their financial needs. Almost all areas of wealth management can be handled by these sites, which will also purchase financial products for their customers as well.

Who needs a human? The wealthiest investors, that’s who.

At present, the online services are targeted at the lowest end of the investment and financial assistance spectrum; the lower or middle class. "These websites provide financial advice to people with less money to invest, and at a lower price point," says Robert Stammers, director of investor education at the CFA institute, a global nonprofit organization of investment professionals to Yahoo! Finance.

Where some traditional financial advisor firms require clients to have a minimum portfolio size in order to begin a relationship, many Americans with five- or low six-digit portfolios are looking for some advice from someone who is not looking at them as a cash cow.

Online advisors don’t have eyes, so they can’t look at a client in any way.

Wealthier investors are much more likely to want and require the personal service that comes from a human financial advisor. However, even the wealthiest advisors are taking advantage of services provided on the internet in terms of investing.

In a Spectrem’s Millionaire Corner study of ultra high net worth investors with a net worth between $5 million and $25 million, 23 percent said they are likely to start using online brokerage firms or will increase their usage of such firms, while 38 percent expressed the belief that online brokerage firms offer personal services. Fifty-one percent said they believe online brokerage firms offer talented advisors (although that choice ranked well below all other choices for financial services).

Online brokerage firms were ranked much higher than some other more established types of financial providers, like banks and accounting firms, for providing “innovative products and services.” There was also a relatively small difference between established financial provider firms and online brokers when investors were asked “is this firm likely to fulfill your needs. Sixty-six percent said “yes’’ to accounting firms and 48 percent said “yes’’ to online brokers.

A different Millionaire Corner study showed that 18 percent of all investors allow an online broker to manage their assets and provide financial advice. That number rises to 33 percent among investors aged between 48 and 54, and 27 percent for those under the age of 48.

There are different types of online advisors. Some companies actually use human certified financial planners, who help create financial plans for investors without actually meeting them. LearnVest, which says its average client earns $75,000 a year, will allow a client to spend $69 for two phone call meetings with a certified financial planner, who can then be accessed by email thereafter for a subscription rate of $19 per month. LearnVest has more extensive subscription plans that can go up to an initial $399 followed by the $19 monthly fee.

LearnVest founder and CEO Alexa von Tobel explained the company’s service model to Yahoo! Finance. “Financial planning should not be a luxury; it should be available to everyone.”

Other companies, such as Personal Capital, employ video chatting for an initial meeting fee as a less expensive way to have that introductory meeting that traditional investment firms require and charge heavily to conduct.

While LearnVest employs planners that actually have voice meetings with clients, other online services use computer generated algorithms to produce plans for clients without the need for an actual “meeting".

WealthFront, which currently has $700 million in client portfolios, describes itself as “a registered investment advisor that provides a client experience primary through software (without a decided human financial advisor for each client and without retail locations to provide client support). These advisors must also provide client support and investment advice, automated software-based management for a diversified investment portfolio based on client risk tolerance, and the ability to open and fund an account electronically.

The positives to that kind of interaction is that it is much cheaper than a face-to-face meeting or even the fees set forth by LearnVest. The negatives are that online advising services cannot provide emotional support, or much in the way of explaining why one product or investment method is better than another.

FutureAdvisor.com offers free advice once you link all of your financial wallets, such as checking, savings and any investment accounts. It looks into the puzzle that is a consumer’s financials and spits out some advice for future movement of funds. Keeping in mind a consumers’ risk tolerance, age and other specifications, the site will routinely offer advice for investment possibilities.

“We give advice for free. You don't have to give us your money, we don't invest it for you, and we don't take a percentage (of your assets)," said FutureAdvisor.com co-founder Bo Lu.

Then, there are two plans, with charges of $49 or $195 annually, which allows for video face time with an advisor, full-time portfolio monitoring, or unlimited call time with a professional. Investors seem to like the idea of online financial advising. According to venture capital statistics, LearnVest has already attracted more than $41 million in startup funding in four years. Other similar firms are receiving startup funding from angel investor firms.



About the Author


Kent McDill

kmcdill@spectrem.com

Kent McDill is a staff writer for Millionaire Corner. McDill spent 30 years as a sports writer, working for United Press International and the Daily Herald of Arlington Heights, Ill. From 1988-1999, he covered the Chicago Bulls for the Daily Herald, traveling with them every day through the nine-month season. He also covered the Bulls for UPI from 1985-88, and currently covers the team for www.nba.com. He has written two books on the Bulls, including the new title “100 Things Bulls Fans Should Know And Do Before They Die’, published by Triumph Books. In August 2013, his new book “100 Things Bears Fans Should Know And Do Before They Die” gets published.

In 2008, he resigned from the Herald and became a freelance writer. The Herald hired him to write business features and speeches for the Daily Herald Business Conferences and Awards presentations.

McDill also writes a monthly parenting column for the Herald’s Suburban Parent magazine.

McDill is the father of four children, and an active fan of soccer, Jimmy  Buffett and all things Disney.

 


 

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